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Revitalizing the Food Supply Chain

October 19, 2022

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A recent article published by the World Economic Forum ran under a headline declaring the global food supply chain dead.[1] I believe the headline is both harsh and hyperbolic. Nevertheless, it draws on a comment made by UN Secretary-General António Guterres, who stated, “This year’s food crisis is about lack of access. Next year’s could be about lack of food.” James Rogers (@jamestrogers), CEO of Apeel Sciences and author of the article, notes that Guterres’ speech marks “a crescendo moment for the food system and a warning for the world. The words were simple and stark: unless we act differently, we could face hunger on a mass scale, as 49 million people now risk famine or famine-like conditions.”

 

Rogers calls the pending food crisis “the world’s most visible issue.” He adds, “Shocks created by war, COVID-19 and climate have begun to overwhelm our fragile food supply chain, raising it to the top of the geopolitical agenda.” His arguments beg the question: Can the global food supply chain be fixed? According to Rogers, “Policymakers, innovators and international leaders agree that we must seek different pathways to ensure food security and move beyond the current status quo of prioritizing efficiency over security. This shift will also entail moving from dependency to diversity and globalization to regionalization while thinking creatively about how the chain is linked.”

 

Food Supply Chain Troubles

 

Rogers pointed out three sources of food supply chain woes: war, COVID-19, and climate change. Journalist Marnie Shure (@marnieshure) offers up a few more reasons the food supply chain is experiencing difficulty.[2] They are:

 

• Increase in demand. Everybody has to eat and demand for food products has not decreased just because supply chain disruptions have occurred. As the global middle class has expanded, their demand for more and different foods has also increased. In addition, Rogers explains, “The global population is growing; therefore, a static food chain cannot keep up the pace to reach everyone in time.”

 

• Transportation woes. The troubles Ukrainian farmers have faced getting their products to the global market have been well publicized. However, even in areas unaffected by conflict, getting agricultural products to market has become more difficult thanks to rising transportation costs and port congestion. Australian farmers have produced bumper crops this year, but worry transportation woes could affect getting those products to the global market. Transportation costs, which are bumping up food prices, are a particular concern for people living in poorer nations. Just as importantly, shipping delays can negatively affect getting fresh produce to market. Rogers explains, “Produce is a living, breathing thing with a lifespan. Fresh produce relies on proper handling, storage, humidity and temperature after harvest.”

 

• Rising food costs. Everyone is now feeling the effects of inflation — which occurs when demand outpaces supply. The effects of inflation are cumulative. Rising prices in one area inevitably cause price increases in other areas. The agricultural sector is not immune to this conundrum. The war in Ukraine caused oil and fertilizer prices to surge as the availability of Russia resources decreased. Food prices also increased as access to Ukrainian grain was curtailed. And, as noted above, other transportation woes also added to price increases.

 

• Packaging constraints. During the farm-to-fork journey, most food products eventually require packaging. Journalists Jennifer Smith (@JenSmithNYC) and Paul Page (@PaulPage) report, “Broader supply-chain upheaval is also hitting food distributors, delaying shipments of overseas products like tuna and olives and holding up delivery of corrugated cardboard and other packaging materials.”[3] Suzanne Rajczi, chief executive of distributor Ginsberg’s Foods Inc., told Smith and Page, “We can make salad dressing but we can’t make the bottles to sell the salad dressing.”

 

• Lack of workers. Jobs in the food supply chain aren’t often glamorous and they all require hard work. Shure writes, “This might be the most complex issue of all, since there’s a lack of workers everywhere: processing plants, distribution centers, trucking companies, restaurant servers, etc.” Immigration policies (or the lack thereof) often exacerbate labor shortage woes. As a result of labor shortages, automation in the food supply chain is gaining a lot of traction.

 

With so many challenges facing the global food supply chain, it should be clear that no silver bullet solution is going to make things better. Instead, pundits suggest a number of different strategies are required to improve the current situation.

 

Fixing the Food Supply Chain

 

Journalist Samantha Oller (@OllerWriter) reports a study published by the International Panel of Experts on Sustainable Food Systems (IPES Food) concluded that structural flaws in the food supply system need correcting. She writes, “These fundamental weaknesses include a lack of crop and dietary diversity, with an overreliance on staples like corn, wheat, and rice; opaque and speculation-prone grain markets that don’t reflect real-world supply; and cycles of food insecurity driven by conflict, climate change, and poverty. The report calls on world leaders to improve market transparency and expand people’s diets to include a greater variety of foods and more resilient crops.”[4] The report also calls on advanced economies to ramp up the production of food, energy, and fertilizer. Other recommendations for improving the food supply chain include:

 

• Improving supply chain visibility. Almost all experts suggest that improving supply chain visibility will help improve the food supply chain. Saptarshi Choudhury, director of emerging technology at Farm to Plate, explains, “In order to orchestrate well-informed, data-supported decisions, supply chain managers need to have a clear, end-to-end view of the entities and capabilities within the system. … By leaning on full chain transparency, companies can incorporate processes that support decision-making based on total impact across all functions.”[5]

 

• Fostering better traceability. Choudhury insists the food supply chain must have “pinpoint traceability.” He explains, “The response to a supply chain disruption relies on the ability to identify its source as quickly as possible. Only through expeditious action can a company avoid tremendous waste, financial loss or reputational harm. End-to-end transparency allows this sort of granular monitoring from the source all the way through to consumer or business customer, ensuring pinpoint accuracy in diagnosing an issue, and stopping or reversing flow only where necessary.”

 

• Implementing advanced technologies. Choudhury writes, “By additionally incorporating a digital technology platform to track and store data-driven insights, food supply chain leaders can further refine strategies based on detailed historical information on key governance factors.” One of the recommended technologies is the Internet of Things (IoT). The staff at New Electronics explains, “IoT-enabled systems can have an impact throughout the food supply chain, from better crop management to optimizing the efficiency of home food deliveries. Warehousing costs can be reduced with pressure sensors, which alert users when stock is running low and help predict future demand and potential shortages.”[6]

 

Perhaps the most discussed technology for improving the food supply chain is artificial intelligence (AI). Cognitive technologies, like the Enterra Global Insights and Decision Superiority System™, can help consumer packaged goods manufacturers better understand the changing business landscape so that better supply chain decisions can be made. Jim Mason, a blockchain practice leader at Farm to Plate, asserts this capability is critical. He writes, “The ability to adapt to changes in a supply chain is essential. Challenges can come in the form of low fuel supplies, lack of workers to harvest produce, product shortages, or extreme drought. Technology enables supply chain managers to run scenarios ranging from worst-case to the most common, and allows them to plan accordingly.”[7] He adds, “When it comes to building strong and more resilient food supply chains, there are three areas for improvement: digitization, adaptability and flexibility.”

 

• Reducing food waste. Entirely eliminating food waste is impossible. Nevertheless, there remains a lot we can do and should do. Journalist Sara Kiley Watson (@SaraKileyWatson) explains, “It’s no surprise that wasting things is a nightmare for the environment — everything that we eat, wear, and otherwise consume takes up natural resources that in many cases are far from infinite. When it comes to food waste, the environment takes a double whammy — water, packaging, transportation, and agricultural resources get used up for naught, and that leftover sandwich or container of expired spinach you bought in hopes of healthy eating releases greenhouse gases as it decomposes in a landfill.”[8]

 

• Strengthening risk management strategies and processes. Choudhury notes, “Supply chain managers are under increasing pressure to mitigate risks before they negatively impact the flow of product. Transparency allows for identifying and prioritizing potential risks, bridging information gaps and using insights to monitor changes going forward.” Steve Shebuski, Vice President of Digital Transformation at Blue Horseshoe, adds, “Risk mitigation is defined as the technique of assessing, minimizing, and preventing accidental loss to a business through the use of insurance, safety measures and relevant applications. Supply chain disruptions are hard to predict (i.e., natural disasters, war, transportation delay). Food and beverage manufacturers and retailers depend on well-thought risk mitigation strategies in the event an element of the ‘chain’ breaks or becomes loose.”[10]

 

Concluding Thoughts

 

Rogers concludes, “The ‘supply chain’ is now entrenched in the mainstream lexicon with a wider appreciation for food’s field-to-fork journey, with disruptions to that journey stirring discussion. That indicates that we value food differently, meriting availability and supply resilience, not just price. … To understand the food system as the singular, unifying force for people on our planet. To ensure the food we produce reaches those who need them and can sustain livelihoods for producers and system workers. For positive system disruption to work, we need everyone to participate in the living supply chain that connects and links us all. … It’s time to prove the world’s most visible issue is also the most solvable. It’s time to build the living supply chain together.” He’s right. Everyone from farmers to consumers are stakeholders in the global food supply and each has a role to play in ensuring better food security.

 

Footnotes
[1] James Rogers, “The supply chain is dead: Why we must build a ‘living supply chain’ for food,” World Economic Forum, 12 August 2022.
[2] Marnie Shure, “All the reasons the food supply chain is strained right now,” The Takeout, 26 May 2021.
[3] Jennifer Smith and Paul Page, “Food Supply Chains Are Stretched as Americans Head Back to Restaurants,” The Wall Street Journal, 21 May 2021.
[4] Samantha Oller, “Fix these structural flaws to prevent the next global food price crisis, report advises,” Food Dive, 6 May 2022.
[5] Saptarshi Choudhury, “How Transparency Will Elevate the Post-Pandemic Food Supply Chain,” SupplyChainBrain, 2 July 2021.
[6] Staff, “IoT technology can ease food supply chain pressures,” New Electronics, 25 October 2021.
[7] Jim Mason, “Three Ways Food Supply Chains Will Rebound From the Pandemic,” SupplyChainBrain, 3 August 2021.
[8] Sara Kiley Watson, “11 percent of food waste comes from our homes,” Popular Science, 9 March 2021.
[9] Steve Shebuski, “The Role of Risk Mitigation in the Food Supply Chain,” QSR Magazine, 17 June 2021.

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